Egypt is paying the price for its ruling military council’s failure to wholeheartedly back last year’s revolution in neighbouring Libya in hundreds of thousands of lost jobs, officials in Tripoli’s transitional authority say.

Libya has tightened rules for thousands of Egyptian labourers eager to return to old jobs or to find new work in the oil-rich country while lifting restriction for Tunisians, who have flooded the Libyan service sector.

“I was in Libya for seven years,” said Farag Mohammed, an Egyptian fisherman among the hundreds waiting outside the Libyan embassy in Cairo to get a visa to return to his old job. “Now they are telling me my papers are missing. There are no visas.”

Libyan officials say they tightened visa requirements because they worry that some Egyptians share kinship ties to tribes that supported the ousted regime of late Col Muammer Gaddafi. But privately they say they are also upset at Egypt’s ruling Supreme Council of the Armed Forces (SCAF), accusing it of harbouring former Gaddafi regime loyalists and harassing Libyan revolutionaries at border crossings and airports as they tried to make their way to eastern Libya last year.

“They didn’t help us during the revolution,” said Yousef Salabi, whose older brother, Ali Salabi, is a leading cleric and part of Libya’s rising new political elite. “Now there are some big fishes from the former regime hiding in Egypt.”

Egyptian officials deny the accusations, insisting they played a key role in providing humanitarian aid to Libya’s rebels. They also say they are co-operating with Tripoli authorities to bring alleged Gaddafi allies to justice.

“Those people, after the fall of Libya, entered Cairo and Egypt like any Libyan because we had visa exemptions,” said Ayman Mousharafa, Egypt’s deputy assistant minister of foreign affairs for north Africa. “If the Libyan government has a full detailed demand for extradition of people, saying they are criminals or misused the funds of the Libyan people, they should present it. There are international processes that should be done to according to international laws.”

The issue is crucial for Egypt’s economy, which has suffered in the aftermath of the revolution that overthrew Hosni Mubarak last year. Its deficit is widening and its foreign reserves have plummeted. Unemployment officially stands at 12 per cent but analysts say the real figure could be far higher.

Up to 1.5m Egyptians worked in Libya before the revolution, sending back remittances of up to $1bn a year, according to the International Organisation for Migration. Libya also has investments worth at least $10bn in Egypt, according to Libyan and western analysts, and some worry the new authorities in Tripoli could liquidate the holdings.

Field Marshal Hussein Tantawi, head of Egypt’s ruling military council, visited Libya in January in an attempt to mend ties but was heckled by protesters demanding that his country return former Gaddafi loyalists to Libya. Libyans accuse SCAF of harbouring, among others, former interior minister Nasser Mabrouk and Khaled al-Touhami, a former security chief allegedly responsible for a long-running crackdown on Islamists.

“We are insisting and sending calls to all countries that friendly relations should be enhanced by showing sympathy for the Libyan cause by not harbouring these elements,” a Libyan diplomat said. “It is causing anger in Libya.

“On the Libyan street, the population is thinking the government bodies are not putting pressure and doing enough work to legally chase these remnants of the old regime. Some of them are very dangerous.”

Ideological differences between Libya’s ascendant political class and Egypt’s military rulers also colour the dispute. Former president Hosni Mubarak and Col Gaddafi collaborated for decades in suppressing Islamist movements that are now taking power across north Africa. Libyan officials privately say they believe Mr Tantawi and his entourage remain hostile to the new political forces unleashed by the continuing wave of revolutions across the region.

Mr Mousharafa gave details of how Egypt helped Libya during the uprising, including receiving tens of thousands of refugees and dispatching physicians to treat wounded in Benghazi.

“We had 1.3m people scattered all over Libya,” he said. “We were scared that if we recognised the Libyan revolution, Col Gaddafi would use them as human shields.”

But a former Egyptian health ministry official who transferred humanitarian supplies to Libya during the uprising said help was provided to Libya by individuals and organisations, and even the foreign ministry, without the co-operation or knowledge of the ruling military council.

In reality, security officials under the command of SCAF systematically harassed Egyptians trying to provide aid as well as Libyans trying to move back and forth, he said. “They didn’t care about the political relations,” added the former official, a doctor who asked that his name not be used for fear of retribution. “The people in Tunisia wanted to help [in Libya], so they did. But here, the generals wouldn’t take the political decision whether to help or not.”

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